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Company engaged in operations of Aircraft

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May 5, 2021

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3 mins read

Company engaged in operations of Aircraft – Non Resident Taxation – International Taxation Case Study

GetSetGo  Airways is engaged in operation of aircraft and leased  certain   aircraft from Goeing UK. During the year, the various payment made by GetSetGo  Airways to Goeing UK, were as under : –

Nature Amount Tax on Income Total Payment (including taxes)
Lease Rentals for Aircraft 10,00,00,000 1,00,00,000 11,00,00,000
Payment for  spares and services in connection with the operation of leased aircraft 3,00,00,000 1,20,00,000   4,20,00,000

Compute the exemption u/s 10, if any , assuming both the agreement were entered into  on 31-3-2007 and approved by the Indian Government?

Company engaged in operations of Aircraft – Non Resident Taxation – Solution:-

International Taxation Services

Tax paid by an Indian concern, which is engaged in operation of aircraft , for payment of lease charges/rental for an aircraft or engine of aircraft , to  foreign Government or foreign enterprise shall be exempt from tax u/s 10(6BB). However,  payment for providing spares or services in connection with the operation of leased aircraft or engine of aircraft , to  foreign Government or foreign enterprise are not exempt from tax.

In view of this, tax of  Rs. 1,00,00,000 for lease Rentals for Aircraft shall be exempt in the hands of Goeing UK, while tax of Rs. 1,20,00,000 on Payment for  spares and services in connection with the operation of leased aircraft  shall not be exempt in the hands of Goeing UK .

For any queries, please write them in the Comment Section or Talk to our tax expert

Arinjay Jain

Bio of author

Arinjay is a Chartered Accountant with more than 20 years of post-qualification experience. He worked as Director, in the M&A Tax Division at KPMG in India. Presently, he is advising several MNCs in UAE on Economic Substance Regulations and impact of the UAE Corporate Tax Law on their business and clients across globe on International Tax issues . He is a well recognised Trainer of International Tax and UAE Corporate Tax. The areas of service include the following : - Advise and Compliance relating to International Tax Issues; Advise relating to UAE Corporate Tax Issues; Advise and Compliance relating to UAE Economic Substance Regulations; Advise and Compliance relating to Indian Income Tax Issues; Other connected matters from a Regulatory perspective.

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